Payoff for picking Pandora on your drive? Even fewer ads

With Pandora's launch of car-specific audio ads, free Pandora listeners who use automobile systems to listen to the Web's top radio service will hear fewer ads -- and marketers will have better targeting.

As part of the 2014 Consumer Electronics Show, the Internet's top radio service said it would launch 15- and 30-second audio ads specific to automobile listeners across all 400 vehicles and automotive devices that feature Pandora -- which includes 130 car models with native Pandora integration, as well as 270 aftermarket automotive devices.

The highlight for consumers is that Pandora will deliver fewer audio ads to these free listeners than on any other Pandora platform. (Pandora premium subscribers will continue to have ad-free listening.)

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For advertisers, it means the ability to run car-specific campaigns, targeting listeners who are typically the most engaged with what's being broadcast. The new automobile advertising platform will roll out this month.

"With so much music being consumed in the car, Pandora automotive platforms allow listeners to customize that experience and we are excited to be able to connect with consumers in that environment," State Farm Advertising Director Ed Gold said in a statement. State Farm, as well as BP, Ford Motor Company, and Taco Bell, are among the national brands on board with the new format.

As of December, Pandora had 76.2 million active listeners and 1.58 billion listening hours across all platforms, but that comprises 8.6 percent of total US radio listening. It leaves most of an estimated $14 billion radio-ad market to traditional players.

In cars, Pandora has seen more than 4 million unique users activate it through a native integration across the 23 major auto brands and 8 aftermarket manufacturers. That's more than triple the number from the same time last year.

The car-specific advertising speaks to Pandora's increasing sophistication in marketing, as it evolves into a more competitive advertising alternative to traditional radio. Pandora's advertising model is perceived to be blossoming; Pandora's auto ad strategy also diverges from traditional radio by cutting back the ad load that listeners hear. Terrestrial radio is known for blocks of marketing with seven or more advertisements back to back; Pandora typically only has about two or three ads per hour.

With the new automobile advertising system, those ads will be even fewer for car listeners.

The perception that Pandora's advertising prowess is coming to the fore this year is a combination of several factors. Chief Executive Brian McAndrews took command in September, succeeding Joe Kennedy, who led Pandora for nearly a decade. He's unmistakably a marketing exec, previously serving as senior vice president of Microsoft's Advertiser and Publisher Solutions Group. Before that, he was chief of digital marketing at Aquantive until Microsoft bought it for $6 billion.

Helping Pandora get a bigger piece of that pie is its integration onto the same ad-buying platforms where radio stations compete for marketing dollars. These services, Strata and Mediaocean, put Pandora's stats alongside those of its terrestrial competitors in forums that account for the overwhelming majority of local ad sales.

Stacked up against traditional radio, Pandora has the added appeal of targeted listeners for advertisers, thanks to its wealth of data about them: location, age, and taste preferences.

Still, Pandora faces increasing competition for Internet listeners. Giants like Apple and Google added new services like iTunes Radio and All Access last year, longtime players like Spotify and Slacker launched new features or shook things up with updates, and more are coming: Google is said to be rolling out another subscription service through YouTube next year, and Beats' paid subscription-only service and French streamer Deezer's US entrance are expected in 2014, too.

About the author

Joan E. Solsman is a senior writer for CNET focused on digital media. She previously wrote for Dow Jones Newswires and the Wall Street Journal. She bikes to get almost everywhere in New York City and has been doored only once.
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